Provisions already made for exposure to CLNs: Uco Bank

Uco bank On Thursday said that it has fully provided for its exposure to credit-linked notes (CLNs) and its profitability would remain intact for the current financial year.

“We have made an extra provision to the tune of Rs 145 crore to meet any eventuality in the last quarter. During the first nine months of the financial year, our net profit stood at Rs 455 crore and we would be able to meet our full-year profit target of Rs 500 crore comfortably,” said Uco Bank Chairman and Managing Director S K Goel.

Commenting on its Rs 97.42-crore exposure to credit-linked notes to three Indian companies —Ecosteel, Gati and Sterling Biotech — Goel said all are AAA-rated companies and there is no need for further provision.

“We have adequate securities from these three Indian companies in the form of foreign currency convertible bonds (FCCBs), which the companies can buy back in order to repay as per the Reserve Bank of India (RBI) guidelines,” he said.

However, during a limited review of accounts, the audit committee had pointed out that the bank has not made the requisite provisions on a marked-to-market basis, but it has treated the Rs 97.42-crore exposure to CLNs as loans and advances and not as exposure to a financial instrument.